Flsmidth & Co. A/s · OMXCOP:FLS
Flsmidth & Co. A/s — 9M 2022 Earnings Presentation
43 slides from Flsmidth & Co. A/s's earnings presentation, Nov 8, 2022
Slide 1: Investor Presentation Interim Report 9M 2022
8 November 2022 INVESTOR PRESENTATION INTERIM REPORT 9M 2022 The information contained or referenced in this presentation is proprietary to FLSmidth and is protected by copyright law
Slide 2: Forward-looking statements
Forward-looking statements FLSmidth & Co. A/S’ financial reports, whether in the form ▪ Statements regarding future economic performance, supplies and production, unexpected breach or of annual reports or interim reports, filed with the Danish future actions and outcome of contingencies such as term
Slide 3: Q3 2022 key highlights
Q3 2022 key highlights GROWTH MOMENTUM SUSTAINED MARKET OUTLOOK ▪ Strong Mining order intake growth of 30%, with Service up by 53% ▪ Resilient mining market with positive long- term outlook ▪ Adjusted Mining EBITA margin of 10.1%* (excluding the dilutive impact from TK Mining, FLSmidth standalone ad
Slide 4: Strong growth in Mining order intake driven by a 53% growth in service
Strong growth in Mining order intake Q3’22 HIGHLIGHTS driven by a 53% growth in service +13% Organic order intake growth DKKm 4,500 MINING ORDER INTAKE DKKm 6,000 MINING ORDER INTAKE 4,097 +30% 4,000 +8% 5,000 3,500 1,094 3,152 3,000 -8% 4,000 Acquired order intake growth 1,094 2,500 1,185 1,447 3,0
Slide 5: Strong growth in Mining revenue driven by a 50% growth in service
Strong growth in Mining revenue Q3’22 HIGHLIGHTS driven by a 50% growth in service +7% Organic revenue growth DKKm 4,500 MINING REVENUE DKKm 5,000 MINING REVENUE 4,000 3,946 +24% +9% Acquired revenue growth 3,500 3,000 3,180 -7% 1,339 4,000 1,339 3,000 2,500 1,445 1,406 +24% 1,445 2,000 2,000 1,500
Slide 6: Good underlying Mining EBITA margin
Good underlying Mining EBITA margin MINING EBITA ADJ. EBITA MARGIN Q3 2022 DKKm Margin 10.1% 400 12% 10.5% 10.1% 9.5% 10% 300 Excluding DKK 115m in costs related to integration 8% of TK Mining and Russia wind-down in Q3 2022 7.8% Adj. Q3 2021: 10.4% 7.2% 200 6% 302 REPORTED EBITA MARGIN 276 284 4% 1
Slide 7: Strategic rationale for TK Mining acquisition confirmed, synergy target raised and accelerated
Strategic rationale for TK Mining acquisition confirmed, plus synergy target raised and accelerated KEY DRIVERS AND BENEFITS OF THE ACQUISITION PAYBACK ON THE ACQUISITION BUSINESS CASE • Accelerate our growth ambitions with strategic focus on Mining Purchase Integration Loss making • A stronger, com
Slide 8: Our clear leadership position in grinding technology has been further strengthened with the HPGR-Pro
Our clear leadership position in grinding technology has been further strengthened with the HPGR-Pro FLSMIDTH’S MARKET LEADING HPGR* ▪ HPGR-Pro acquired via the TK Mining acquisition ▪ +150 HPGRs installed worldwide in mining applications ▪ Strong service and support setup with multiple service cent
Slide 9: Continued high service share of the Cement order intake
Continued high service share of the Q3’22 HIGHLIGHTS Cement order intake +8% Organic growth DKKm 2,000 CEMENT ORDER INTAKE DKKm 2,500 CEMENT ORDER INTAKE +16% 1,617 2,000 +16% 1,500 1,397 Reported growth +44% 590 409 1,500 925 590 64% 1,000 409 1,000 Service share of order intake in Q3 2022 (71% in
Slide 10: Good service driven Cement revenue growth and continued positive EBITA trend
Good service driven Cement revenue Q3’22 HIGHLIGHTS growth and continued positive EBITA trend +7% Organic revenue growth DKKm 2,000 CEMENT REVENUE DKKm CEMENT EBITA Margin +13% 75 4% 1,675 3.0% +13% Reported revenue growth 1,500 780 1,480 780 50 0.2% 2.1% 2% 25 50 649 -1% 787 787 31 0% 53% 1,000 0 3
Slide 11: New Non-Core Activities segment to be fully exited
New Non-Core Activities segment to be fully exited DEFINITION OF NON-CORE ACTIVITIES AND PRODUCTS NON-CORE ACTIVITIES SEGMENT ▪ No longer deemed to be of core strategic importance to FLSmidth ▪ Offer limited or no aftermarket potential ▪ All legacy FLSmidth and former TK Mining brands: Port Systems,
Slide 12: Backlog composition of the continuing Mining and Non-Core Activities segments
Backlog composition of the continuing Mining and Non-Core Activities segments MINING STRUCTURE STRUCTURE FROM Q4 2022 AS OF 9M 2022 Continuing Mining segment ~13.0bn ~11.2bn + ~3.7bn = ~14.9bn Legacy FLSmidth Mining order backlog order backlog order backlog FLSmidth Mining from legacy from former or
Slide 13: Consolidated financial performance in Q3 2022
Consolidated financial performance in Q3 2022 (DKKm) Q3 2022 Q3 2021 Change COMMENTS Order intake 5,714 4,549 26% ▪ Organic order intake increased 11% driven by growth in both Revenue 5,621 4,660 21% Mining and Cement Gross margin 25.5% 23.0% SG&A 1,012 682 48% ▪ 7% organic revenue growth Adjusted E
Slide 14: Positive gross margin development, mainly driven by a higher service share of revenue
Positive gross margin development, mainly driven by a higher service share of revenue GROSS PROFIT GROSS MARGIN BY INDUSTRY DKKm +33% growth vs. Q3 2021 Gross margin Q3 2022 vs. Q3 2021 2,000 30% 24.7% 25.5% 23.0% 1,500 20% 1,000 24.2% 26.0% 24.2% 10% 20.5% 500 0 0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Mining
Slide 15: SG&A ratio increased to 18%
SG&A ratio increased to 18% driven by Russian wind- down costs, integration costs and TK Mining cost base SG&A COSTS COMMENTS DKKm +48% increase vs. Q3 2021 SG&A ratio ▪ SG&A costs increased 48% to DKK 1,012m from DKK 682m in 1,200 18.0% 20% Q3 2021 driven by: 17.0% 1,000 14.6% ▪ Negative currency i
Slide 16: Good underlying EBITA margin development
Good underlying EBITA margin development EBITA EBITA MARGIN BRIDGE DKKm +10% growth vs. Q3 2021 EBITA margin Q3 2022 vs. Q3 2021 Approx. %p development 600 10% 8.0% 8.0% -1.5% 8% 2.5% 6.5% 400 6.1% 5.9% -2.5% 6% 2% 8.0% 7.5% -1% 6.5% 1% 4% -1% 5.9% 200 2% 0 0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 EBITA Acquis
Slide 17: Net working capital ratio unchanged at 9.2%
Net working capital ratio unchanged at 9.2% NET WORKING CAPITAL NET WORKING CAPITAL DEVELOPMENT IN Q3 2022 DKKm NWC ratio (DKKm) Q3 2022 Q2 2022 Change 2,500 12% 10.4% Inventories 4,030 2,976 1,054 9.2% 2,000 Trade receivables 5,572 4,300 1,272 9.2% 8% 1,500 Trade payables, net -3,576 -2,929 -647 WI
Slide 18: Cash flow turned positive driven by improved business performance
Cash flow turned positive driven by improved business performance GROUP CASH FLOW CONTINUING ACTIVITIES (DKKm) Q3 2022 Q3 2021 DKKm EBITDA adjusted 428 385 1,000 Change in provisions 67 71 800 Change in NWC 43 -374 Financial payments -7 -37 600 Taxes paid -25 -93 400 CFFO (continuing activities) 506
Slide 19: Capital structure remains well within targets with a 0.7x gearing
Capital structure remains well within targets with a 0.7x gearing after payment of the TK Mining acquisition EQUITY NIBD DKKm Equity ratio 37.2% Equity ratio DKKm NIBD/EBITDA 0.7x NIBD/EBITDA 12,000 50% 2,000 2.5 10,000 2.0 40% 1.5 8,000 1,000 30% 1.0 6,000 20% 0.5 4,000 0 0.0 10% 2,000 -0.5 0 0% -1
Slide 20: Impact from the former TK Mining on the Q3 2022 performance
Impact from the former TK Mining on the Q3 2022 performance IMPACT ON P&L COMMENTS (DKKm) September 2022 ▪ The dilutive impact from TK Mining was partly driven by costs related to the transition into Order intake 260 FLSmidth Revenue 287 ▪ EBITA of DKK -47m diluted Mining Q3 2022 EBITA margin by aro
Slide 21: Initial recognition of TK Mining acquisition
Initial recognition of TK Mining acquisition PRELIMINARY PURCHASE PRICE ALLOCATION OF TK MINING COMMENTS (DKKm) 31 August 2022 ▪ Final purchase price depends on adjustments primarily Goodwill 1,823 related to ongoing projects and development in net working capital Patents and IP rights 65 Property,
Slide 22: Financial guidance for 2022 is maintained
Financial guidance for 2022, as set out on 20 October 2022, is maintained MINING CEMENT NON-CORE GROUP ACTIVITIES 9M 2022 August 2022 October 2022 9M 2022 August 2022 October 2022 9M 2022 August 2022 October 2022 9M 2022 August 2022 October 2022 Realised guidance guidance Realised guidance guidance
Slide 23: Sustainability focus across our value chain
Sustainability focus across our value chain KEY SUSTAINABILITY HIGHLIGHTS WOMEN MANAGERS SAFETY (TRIR) ▪ Order received for several solutions from the MissionZero Mine flowsheet to % Total Recordable Incident Rate/ a zinc and lead mine in Kazakhstan. The order was effective in Q4 2022 million workin
Slide 24: Capital Markets Day
Please register for our Capital Markets Day on FLSmidth.com/CMD2023 or use the QR code below 18 January 2023 Capital Markets Day Copenhagen & hybrid event 24 8 November 2022
Slide 25: Q&A MissionZero
Q&A Esmorn Mission TOWARDS ZERO. EMISSIONS IN MINING AND CEMENT With MissicnZero, we enable our customers in cement and mining to move towards zero emissions in 2030. As a leader in the cement and mining industries, we see a significant business opportunity in bringing these indus- tries into a sust
Slide 26: Investor contact information
Investor contact information FINANCIAL CALENDAR INVESTOR RELATIONS CONTACTS 18 January 2023 Capital Markets Day Jannick Lindegaard Denholt 22 February 2023 Annual Report 2022 VP, Head of Investor Relations 29 March 2023 Annual General Meeting +45 2169 6657 11 May 2023 Q1 2023 Interim Report jli@flsm
Slide 27: Appendix
Appendix CONTENT ▪ FLSmidth at a glance ▪ FLSmidth in the world ▪ The green transition ▪ EU Taxonomy ▪ Mining financials ▪ Mining guidance breakdown ▪ Mining order intake by commodity ▪ Cement financials ▪ Revenue and EBITA margin by Industry ▪ Order intake and revenue growth ▪ Order backlog maturit
Slide 28: FLSmidth at a glance
FLSmidth at a glance We are a leading supplier of productivity and sustainability solutions to the global mining and cement industries. We enable our customers in mining and cement to move towards zero emissions by 2030. 1882 Danish company 10,117 Our more than 10,000 employees 150+ We serve custome
Slide 29: FLSmidth in the world
FLSmidth in the world North America Europe, North Africa & Russia 22% 12% 17% ▲ 18% ▲ 2% 22% Share of employees Share of revenue Reported Share of employees Share of revenue Reported 2020: 21% revenue growth 2020: 16% 2020: 19% revenue growth 2020: 25% South America Asia 21% ▼ -4% 20% 11% ▲ 30% 5% S
Slide 30: Green transition relies on minerals and cement
Green transition relies on minerals and cement Global economic development and the green transition increase the demand for minerals and cement. For this development to be truly green, we must reduce the environmental impact from the production of these materials 75% Global demand for refined copper
Slide 31: Our CO2 impact across the value chain
Our CO2 impact across the value chain – relative footprints SCOPE 3 SCOPE 1 SCOPE 2 SCOPE 3 UPSTREAM OUR OPERATIONS HEATING AND POWER DOWNSTREAM Suppliers Our operations (direct own emissions) and Purchased goods heating and power Use of sold End-of-life and services products treatment < 0.01 % of s
Slide 32: EU Taxonomy, a significant part of our business activities is not yet in scope
EU Taxonomy, a significant part of our business activities is not yet in scope EU TAXONOMY ENVIRONMENTALS GOALS ELIGIBILITY (”IN SCOPE”) COMMENTS • Only two out of the six Taxonomy environmental Climate change mitigation goals have been defined by the EU Eligible 16.2% • The two defined goals relate
Slide 33: Mining guidance including former TK Mining and Non-Core Activities segment
Mining guidance including former TK Mining and establishment of Non-Core Activities segment segment MINING REVENUE GUIDANCE BREAKDOWN MINING EBITA MARGIN GUIDANCE BREAKDOWN incl. former TK Mining and establishment of Non-Core Activities segment incl. former TK Mining and establishment of Non-Core Ac
Slide 34: Mining
Mining Q3 Q3 9M 9M (DKKm) 2022 2021 Change Organic 2022 2021 Change Organic FY 2021 FY 2020 Change Organic Order intake 4,097 3,152 30% 13% 13,243 9,670 37% 26% 13,281 12,811 4% 5% - Service order intake 3,003 1,967 53% 8,075 5,727 41% 7,705 6,888 12% - Capital order intake 1,094 1,185 -8% 5,168 3,9
Slide 35: Mining order intake by commodity
Mining order intake by commodity MINING ORDER INTAKE Q3 2022 Other Mining 24% Copper 39% 13% Iron ore 1% Fertilizer 8% 15% Coal Gold 35 8 November 2022
Slide 36: Cement
Cement Q3 Q3 9M (DKKm) 2022 2021 Change Organic 2022 9M 2021 Change Organic FY 2021 FY 2020 Change Organic Order intake 1,617 1,397 16% 8% 5,390 4,479 20% 14% 5,952 5,713 4% 6% - Service order intake 1,027 988 4% 2,958 2,665 11% 3,457 2,934 18% - Capital order intake 590 409 44% 2,432 1,814 34% 2,49
Slide 37: Revenue and EBITA margin by Industry
Revenue and EBITA margin by Industry MINING CEMENT DKKm Margin DKKm Margin 4,500 12% 2,500 4% 3,946 4,000 10% 3,500 2,000 2% 1,339 1,675 3,000 8% 1,406 1,500 0% 2,500 1,445 6% 780 2,000 649 1,000 787 -2% 1,500 4% 2,607 1,000 2,123 500 -4% 1,735 2% 849 895 500 693 0 0% 0 -6% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q
Slide 38: Order intake and revenue growth
Order intake and revenue growth Order intake growth Mining Cement Group Revenue growth Mining Cement Group Q3 2022 vs Q3 2021 Q3 2022 vs Q3 2021 Organic 13% 8% 11% Organic 7% 7% 7% Acquisitions 8% 0% 6% Acquisitions 9% 0% 6% Currency 9% 8% 9% Currency 8% 6% 8% Total growth 30% 16% 26% Total growth 2
Slide 39: Order backlog and conversion to revenue
Order backlog and conversion to revenue Order backlog / last 12 months revenue at 124.3% in Q3 2022 ORDER BACKLOG EXPECTED BACKLOG CONVERSION TO REVENUE +54.0% vs. Q3 2021 DKKm Order backlog/Revenue ▪ 22% in 2022 30.000 140% ▪ 59% in 2023 25.000 120% ▪ 19% in 2024 and beyond 100% 20.000 80% The incl
Slide 40: Regional revenue split in 9M 2022
Regional revenue split in 9M 2022 REVENUE REVENUE 9M 2022 9M 2021 18% 22% 22% 25% 16% 17% 22% 22% 19% 17% North America North America South America South America Europe, North Africa, Russia Europe, North Africa, Russia Sub-Saharan Africa, Middle East & South Asia Sub-Saharan Africa, Middle East & S
Slide 41: Group
Group Q3 Q3 9M 9M (DKKm) 2022 2021 Change Organic 2022 2021 Change Organic FY 2021 FY 2020 Change Organic Order intake 5,714 4,549 26% 11% 18,633 14,149 32% 22% 19,233 18,524 4% 5% - Service order intake 4,030 2,955 36% 11,033 8,392 31% 11,162 9,822 14% - Capital order intake 1,684 1,594 6% 7,600 5,
Slide 42: Cash flow statement
Cash flow statement GROUP (DKKm) Q3 2022 Q3 2021 Change 2021 EBITDA, continuing adjusted 428 385 43 1,345 EBITDA, discontinued -5 -12 7 -19 Change in provisions 61 59 2 117 Change in NWC 24 -494 518 612 Financial payments -7 -37 30 -69 Taxes paid -25 -93 68 -537 CFFO (Group) 476 -192 668 1,449 CFFI
Slide 43: Net working capital components
Net working capital components Net working capital increased to DKK 2,170m at the end of Q3 2022 DKKm DKKm TRADE RECEIVABLES TRADE PAYABLES 6,000 5,572 4,000 3,576 5,000 3,000 4,000 3,000 2,000 2,000 1,000 1,000 0 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2020 2020 2021 2021 2021 2021